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Ex-Hawkins Orange-H placed in receivership by shareholder McConnell; owes creditors $30M

Friday 11th May 2018

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Orange-H Group, the McConnell entity set up to run down the residual Hawkins assets after the sale to Downer Group, has been tipped into receivership by its shareholder and creditor just 10 days after being ordered to pay $13.4 million over a leaky school. 

In April last year, ASX-listed engineering consultancy Downer EDI acquired Hawkins’ construction, infrastructure and project management businesses from the McConnell Family for A$55.4 million. Orange-H Group, which remains part of McConnell Ltd, retained a number of legacy and ongoing projects. At the time of the acquisition, Hawkins had negative working capital.

Orange-H now owes creditors approximately $30 million but has claims outstanding with customers of more than $20 million, cash-backed bonds of $14 million and further retentions owing, spokesman David McConnell said in a statement.

“The board and management have worked very hard and been in close negotiation with Orange-H Group’s leading creditors but the process to secure final payments from the various customers has been complex and has taken a lot longer than anticipated and created a cash flow timing issue,” McConnell said. “We were also concerned that a number of parties were commencing legal action and we were mindful of our responsibility to exercise our fiduciary duties”.

According to McConnell, there is "significant value" in the group, with all but two of the legacy projects now completed and only minor work still outstanding on one of these. "The board’s focus is now to leave the company in the best possible position for the receivers to achieve substantial recoveries," he said. 

Receivers Andrew Grenfell and Conor McElhinney of McGrath Nicol have been appointed.

Earlier this month, H Construction North Island, which also used to be part of the Hawkins construction business and is a subsidiary of Orange-H, was ordered to pay $13.4 million towards repairing nine leaky buildings at Botany Downs Secondary School in east Auckland. 

In the High Court in Auckland, Justice Mathew Downs ruled against the company, which built a series of interlinking two-storey buildings with interconnecting roofs between 2003 and 2009, agreeing "the roofs leak because they suffer a host of construction defects, including missing fixings and poorly formed penetrations" and that the ex-Hawkins unit was liable to pay the cost plus GST of remedying five of the six defects, and one component of the sixth defect.


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